Knowledge sharing between marketing and accounting from a coopetitive perspective: Empirical evidence from Vietnam

This study examines cross-functional knowledge sharing at the interface between marketing and accounting departments within business organizations. It develops a coopetition model to examine the effects of contingent variables including cross functional competition and organizational innovativeness on the coordination–sharing– performance (C–S–P) link

Knowledge Sharing between Marketing and Accounting from a Coopetitive Perspective:

Empirical Evidence from Vietnam

NGUYEN PHONG NGUYEN University of Economics HCMC – nguyenphongnguyen@ueh.edu.vn

DOAN NGOC QUE University of Economics HCMC – dnque20@gmail.com

NGUYEN DUNG HAI University of Economics HCMC – dunghai@ueh.edu.vn

of knowledge sharing between the marketing and accounting departments (MAKS) Finally, this study finds that organizational innovativeness partially mediates the MAKS–performance link, emphasizing the role of innovation in transforming knowledge to performance

1 Introduction

The marketing literature has emphasized the performance implication of knowledge sharing between marketing and other departments in business organizations, which creates various competitive benefits including market learning (Luo et al., 2006), innovation (Tsai, 2001), and new product success (Ernst et al., 2010) The accounting literature also supports this view, highlighting the need of the cooperative interactions between marketing and accounting departments in terms of knowledge sharing For example, the marketing department provides the accounting department with market information via customer ordering systems, account receivable collections, and budgets for marketing campaigns to develop financial and operational plans The marketing department, in turn, receives financial knowledge from the accounting department, including product and service costing to make decisions for each business segment (Nguyen, 2014) Knowledge regarding budgeting, customer profitability, and cost variance analysis generated from the accounting department allows the marketing department to make various decisions concerning pricing, product-mix, and customer relationship management (Ratnatunga et al., 1988)

Our literature review found a coordination–sharing–performance (C–S–P) hypothesis, which posits that cross-functional coordination determines cross-functional knowledge sharing The cross-functional coordination is the integration between different parts of an organization to achieve a collective set of tasks and goals, being a crucial antecedent of knowledge sharing (Tsai, 2002; Willem et al., 2006) Obviously, both formal coordination mechanisms (e.g., formalization and lateral relations) and informal coordination mechanisms (e.g., informal networking and shared vision) enable companies to develop communication channels, promote inter-functional cooperation, enhance social interactions between departments, and function as important devices to integrate different pools of knowledge through the organizational network structure (Gupta & Govindarajan, 2000)

Although previous studies have significant contributions to the cross-functional

knowledge sharing literature (Luo et al., 2006), several research gaps remain First,

empirical studies comparing the relative effects of different coordination mechanisms (i.e formalization, lateral relations, informal networking, and shared vision) on MAKS are scant The relative importance of each coordination mechanisms in enhancing knowledge sharing between departments (i.e marketing and accounting) is still

unknown Under resource constraints managers need to use appropriate mechanisms to

maximize MAKS Second, extant literature on the C–S–P link largely ignores the

moderating role of cross-functional competition The review of both marketing and accounting literature detected a lack of empirical evidence about the performance implications of knowledge sharing between the marketing department and the accounting department in the context of cross-functional competition The question remains unanswered as to whether cross-functional competition promotes or impedes

the coordination–knowledge sharing relationship Third, cross-functional knowledge is

a firm’s strategic resource, and realizing its potential value “requires alignment with other important organizational elements” such as organizational innovativeness

(Ketchen et al., 2007) Finally, most cross-functional knowledge sharing studies have

been conducted in Western developed countries; thus, the C–S–P link in transitional economies and collectivist cultures need to be tested

To bridge these above gaps we draw on the social capital theory (Adler & Kwon, 2002; Inkpen & Tsang, 2005) and social embeddedness framework (Granovetter, 1985)

to develop a coopetition model by adding two contingent factors to the C–S–P link These factors are: (i) competition between marketing and accounting; and (ii) organizational innovativeness Next, we validate the coopetition model against a sample

of 178 large business organizations in Vietnam, a transitional economy This paper is presented as follows We initially review the previous studies concerning the C–S–P relationships, and then based on the contingency theory we add the two contingent factors to the C–S–P logic The research design and analysis will be next presented in addition to the research results and discussion

2 Theoretical background, research model, and hypotheses

Building on within-organization cooperation and competition perspectives (Brandenburger & Nalebuff, 1995), we argue that cooperation and competition between marketing and other departments coexist and help develop a coopetition framework Competition arises through diverging interests between parties, creating a win-lose scenario or a zero-sum game structure The opposite perspective, cooperation, emphasizes cooperative interdependencies with fully converging interests (Walley, 2007) This perspective suggests that collaboration is a critical factor for strategic success that brings growth for all parties under a positive-sum game structure (Hill,

1990) Both perspectives have attracted a major criticism for their bias toward different poles of a relationship when, in fact, they equally determine important interdependencies within an organization (Bengtsson & Kock, 2000) The coopetition perspective, on the other hand, indicates that the coexistence of competition and cooperation determines the organization’s interdependencies through a variable-positive-sum game (Dagnino, 2009)

Regarding the relationships among departments in an organization, there is a off between cooperation and competition, which are at the opposite ends of a continuum Competition is generally defined as the conflicting and rivalling relationship among parties (Bengtsson & Kock, 2000) Departments may experience problems coordinating work activities because they have disagreements about the priorities of others, hinder others’ performance, and do not cooperate with one another (Maltz & Kohli, 1996) In the presence of cross-functional rivalry, departments are less likely to share knowledge,

trade-or they will avoid using knowledge shared from the others because acting on the knowledge shared “would be tantamount to being influenced or controlled” by the sharers (Maltz & Kohli, 1996) Luo et al (2006) argued that the interaction between functional departments may be a “double-edged sword,” involving both cooperation and competition Indeed, departments do not only cooperate to achieve the ultimate organizational goals (Narver & Slater, 1990), but they also compete to pursue their own strategic priorities or to defend against loss of status or power (Houston et al., 2001) Take for example the cross-functional conflicts between marketing and accounting The accounting department views the marketing department as an area that incurs too much expenses while it is difficult to measure and evaluate the relationships between marketing expenditures or budgets and the future effectiveness of these expenditures or budgets, which, therefore, are likely to be cut by the accounting department Meanwhile, the marketing department blames the accounting department for its too conservative decisions that lead to an increasing market to book ratio (Sidhu & Roberts, 2008) While departments are determining their roles, identities, and power bases through separations

of tasks, they are strongly motivated to defend against loss of status or power (Hutt et

al., 1995)

2.1 Social capital theory

Social capital theory relates to “goodwill available to individuals or groups” generated by social relationships (Adler & Kwon, 2002) or simply an organizational

network of relationships (Inkpen & Tsang, 2005), containing three dimensions: structural, cognitive, and relational (Nahapiet & Ghoshal, 1998) In this study we propose four coordination mechanisms, including formalization, lateral relations, informal networking, and shared vision, which well reflect all the three dimensions of social capital Formalization is the extent to which policies, rules, task descriptions, and procedures are written down in manuals and established as standard routines (relational) Lateral relations refer to the horizontal links among organizational units that reflect the connections between employees from different units at the same hierarchical level (structural) Informal networking involves the informal relationships between employees from different parts of an organization (relational), whereas shared vision is defined as a shared value culture that enables individuals to communicate “the way of doing things, decision making styles, and objectives and values of the company” (cognitive)

Authors in favor of the social capital perspective contributed to formalization research by raising the relational aspect of social capital (Inkpen & Tsang, 2005; Nahapiet & Ghoshal, 1998) as a determinant of social relations among different departments, which is beneficial for knowledge sharing Formalization improves cooperation and collaboration among workers because it can shape the scope of cross-functional interactions and facilitate the transfer of explicit knowledge by means of rules (Cordon-Pozo et al., 2006)

Lateral relations among departments exhibit the network ties in an organization, which belong to the structural dimension of social capital (Inkpen & Tsang, 2005) The development of these relations depends on organizational practices such as liaison roles, temporary and permanent teams (Gupta & Govindarajan, 2000; Persson, 2006; Willem

& Buelens, 2007; Willem et al., 2006), and joint work in task forces (Ghoshal et al., 1994) Jansen et al (2005) found that cross-functional integrators, such as liaison staff and task forces, stimulate the integration of existing and newly acquired knowledge and enhance organizational units’ capacity to develop novel linkages and associations From the social capital perspective, informal networking is a facilitator of knowledge sharing because of its role in the creation of common knowledge (Tsai, 2002; Willem et al., 2006) and connections between departments (Tagliaventi et al., 2010) Further informal networks such as personal networks enhance the intensity and effectiveness of

knowledge sharing (Willem & Buelens, 2007) by developing cooperative and reciprocal norms (Luo & Hassan, 2009)

Finally, shared vision refers to a culture of shared values that enables a consistent

“way of doing things, decision making styles, and objectives and values of the company” (Martinez & Jarillo, 1989) Shared vision creates mutual trust in an organizational network (Willem et al., 2006) and displays the cognitive dimension of social capital (Inkpen & Tsang, 2005; Nahapiet & Ghoshal, 1998) as it brings workers together and fosters a commitment to mutual goals (e.g., Dawes & Massey, 2005; Maltz & Kohli, 1996; Maltz et al., 2001) It is a key determinant of cross-functional knowledge sharing due to its significant role in promoting cooperation and willingness to share information and ideas in order to achieve mutual goals (Fey & Furu, 2008), such as sales, market share, return on investment, rate of new product introduction, and customer satisfaction (Baker & Sinkula, 1999) Therefore, we propose that:

H1: Formalization has a positive effect on MAKS

H2: Lateral relations have a positive effect on MAKS

H3: Informal networking has a positive effect on MAKS

H4: Shared vision has a positive effect on MAKS

2.2 Social embeddedness framework

Social embeddedness refers to how individuals are structurally embedded in a network of social relations (Granovetter, 1985) Social embeddedness theory proposes that the subsequent behaviors of individuals are affected by the social structure of their relations (Granovetter, 1985; Luo et al., 2006) There are two types of social relations: strong ties and weak ties Strong ties are characterized by a high level of cooperation and frequent interaction regulated by reciprocity, trust, or group norms (Granovetter, 1973; Rindfleisch & Moorman, 2001) Strong ties are effective for transferring tacit knowledge (Hansen, 1999; Reagans & McEvily, 2003; Uzzi, 1997) because through a high level of trust and cooperation they allow people to interact closely and frequently

to share tacit knowledge, which requires more time and effort than sharing explicit knowledge In contrast, weak ties are characterized by competition, infrequent interaction, lack of trust, and limited affect (Dahlstrom & Ingram, 2003; Uzzi, 1999) They can connect diverse groups of people who have diverse pools of knowledge yet do not frequently interact (Burt, 1995), and provide them with new and non-redundant

knowledge Thus, weak ties are needed to access new and diverse knowledge (Hansen, 1999); they are more effective in searching for and transferring explicit knowledge (Reagans & McEvily, 2003) Weak ties can foster the learning process by motivating competitors to search for each other’s knowledge (Quintana-García & Benavides-Velasco, 2004; Tsai, 2002) A combination of strong and weak ties adds greater value to

a business than strong or weak ties alone (Luo et al., 2006)

The interactions between marketing and accounting departments involve both competition and cooperation aspects According to the social embeddedness framework, the cooperation aspect implies strong ties between these two departments and can be established by coordination mechanisms (e.g., formalization, lateral relation, informal networking, and shared vision) These mechanisms can promote sharing tacit knowledge across functional boundaries, in line with the above discussion regarding H4 The competition aspect, which implies weak ties between the marketing and accounting departments, creates more motivation for these departments to learn from one another and promotes explicit knowledge transfer between them This implies that the combination between competition (weak ties) and cooperation (strong ties) may encourage knowledge sharing between these departments (Tsai, 2002) Hence, we argue that the competition between marketing and accounting departments (weak ties) strengthens the effect of coordination mechanisms (strong ties) on cross-functional knowledge sharing In other words, the impact of coordination mechanisms on cross-functional knowledge sharing between marketing and accounting departments is stronger in the presence of competition between these departments Drawing upon the social embeddedness framework, we thus propose the following hypothesis:

H5: Competition between marketing and accounting departments moderates the

positive relationships of: (i) formalization, (ii) lateral relations, (iii) informal networking, and (iv) shared vision, with MAKS

Knowledge is often critical to the innovation process The grandness of knowledge sharing for enhancing organizational innovativeness has been emphasized widely in relevant literature (Lin, 2007; Tagliaventi et al., 2010) Since knowledge is embedded in individuals from different departments, it needs to be shared to generate new ideas and ways of doing things If an organization can disseminate knowledge across its functional boundaries, it can integrate diverse ideas and perspectives from different departments, which should result in innovative ideas (Brettel et al., 2011) In addition, by facilitating

knowledge sharing organizations can reduce interdepartmental conflicts (Griffin & Hauser, 1996), and thus direct departments’ behaviors toward learning from each other The spread of learning among departments, in turn, increases the opportunities to create new knowledge and diffuse novel ideas Acquiring new knowledge increases the likelihood of innovation because departments are exposed to new knowledge that interacts with the knowledge they already held Therefore, we argue that knowledge sharing between marketing and accounting departments has a positive impact on organizational innovativeness

In a rapid changing environment it is crucial for business organizations to engage in innovative activities to develop new products and exploit market opportunities These activities enhance sales and market share since customers tend to buy innovative and distinct products that meet their needs and bring superior value to them (Sandvik & Sandvik, 2003) In general, organizations with a high degree of innovativeness can respond actively to the changes in the business environment and develop new capabilities that bring about a competitive edge and a superior performance (Hult et al., 2004) The marketing literature suggests that an organization’s innovativeness has a positive effect on performance (Calantone et al., 2002) A high level of innovativeness

is associated with more timely and creative introduction of new products and services that provide superior value to customers (Olavarrieta & Friedmann, 2008) In addition, organizations must be innovative to gain a competitive advantage for survival and to stay ahead of their rivals (Li & Calantone, 1998) Therefore, organizational innovativeness can have positive influence on firm performance

In light of the above reasoning we posit that knowledge sharing between marketing and accounting departments promotes organizational innovativeness, which, in turn, enhances firm performance This reflects the mediating role of organizational innovativeness on the nexus between MAKS and firm performance Accordingly:

H6: Organizational innovativeness mediates the relationship between MAKS and

firm performance

Figure 1 illustrates the proposed model for developing the above hypotheses

Figure 1 The proposed model

3 Research method

3.1 Sampling and sampling frame

This study was conducted in Vietnam, an emerging economy with a dataset of 178 large business firms According to Degree 56 ND-CP of the Vietnamese government, the criteria for categorizing a firm as being large are as follows For the manufacturing industry, firms need to have total capital of more than VND100 billion, or more than

300 full-time equivalent employees For service and trading industries, firms need to have total capital of more than VND50 billion, or more than 100 full-time equivalent employees (Vietnamese Government, 2009) To overcome budget and time constraints

we have adopted the convenience-sampling approach to collect our survey data This approach involves selecting firms that are accessible and have potential informants that are willing to participate in the survey We, therefore, have selected CEOs and members

of the board of management and other mid-level managers from different marketing and accounting departments of large-sized firms

The source of emails was constructed from the LinkedIn professional network, containing more than 3,000 emails of the potential informants From February to April

2016 emails were sent to the potential informants via SurveyMonkey, an online survey

tool After two months with two reminder emails with three-week intervals, 460 completed responses were collected

By eliminating responses from small and medium firms, and invalid and careless responses with too short response duration (less than five minutes), we have obtained a final sample of 178 responses with the following industry structure: manufacturing (33.1%), trading (23.6%), and services firms (43.8%) The sampled firms include those with total assets of more than VND200 billion (89.9%) and those with full-time equivalent employees of more than 500 (76.4%) Moreover, the final sample features mid-level managers (42.7%) and top-manager respondents (57.3%) Due to the presence

of 23 firms with informants with tenure of less than two years in our sample, the positions of these informants should be thoroughly examined We find that most of them are top managers, who should be knowledgeable about research issues regarding their companies and could represent their companies to answer the survey questions The average tenure of the respondents of 6.7 years indicates that they have adequate experience to represent their firms to answer the survey

Due to a low response rate of 5.9% we have also conducted a non-response bias test following the procedure recommended by Armstrong and Overton (1977) The independent t‐tests reveal no statistically significant differences in all key measures among the first (earliest) and fourth (latest) quartiles of responses, signifying no response bias in this study

Frequency

(n=178)

Percentage (%)

(assets in VND billion)

Top manager 76 42.7 101–200 18 10.1 Mid-level

Frequency

(n=178)

Percentage (%)

Frequency

(n=178)

Percentage (%) 2–5 years 72 40.5 Firm size (full-time

employees)

6–10 years 48 27.0 201–500 42 23.6 11–20 years 25 14.0 501–1,000 48 27.0

18 10.1

≤ 5 years 19 10.7 Joint venture with

> 50 years 10 5.6

3.2 Measurement scales and reliability and validity tests

We measure formalization, lateral relations, informal networking, shared vision, MAKS, and competition between marketing and accounting departments, using adopted and adapted scales from the literature (Calantone et al., 2002; Ghobadi & D'Ambra, 2012; Luo et al., 2006; Willem & Buelens, 2009) All of these constructs are evaluated

by seven-point Likert scales anchoring from 1 (strongly disagree) to 7 (strongly agree)

To test the proposed hypotheses we use power distance (measured by a five-point Likert